British house prices fall as election nears

Government bonds and interest rate futures shot up after the figures on speculation the Bank of England will not be in a hurry to raise borrowing costs again as evidence builds that five hikes in 1½ years are taking their toll on consumers and the once-booming housing market.

"April is a fairly confident no-change. May will be a closer call but on balance we think there are significant downside risks to the economy," said David Page, economist at Investec.

"Overall it doesn't look like the housing market is plummeting, but it is soft and the Nationwide figures remind us there is a risk of a more pernicious slump."

However, Bank of England figures showed that mortgage lending rose slightly in February to their highest rate in five months.

Nationwide said prices fell a seasonally adjusted 0.6 per cent this month, the biggest decline since June 1995.

That brought the annual rate of increase to just 7.9 per cent, its slowest since June 2001, from 10.2 per cent in February.

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